Investment Banking Firm, Goldman Sachs Applies for DeFi ETF




  • 27th, July 2021 (1 month ago)
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Leading Investment banking firm, Goldman Sachs has applied for a decentralized finance-based ETF, which will offer exposure to public companies. The investment firm made the application to the US Securities and Exchange Commission (SEC) on July 26. However, the proposed DeFi ETF does not actually seem like one, according to reports.


In its application, Goldman Sachs titled the proposed fund ‘Goldman Sachs Innovate DeFi and Blockchain ETF.’ The ETF will produce results similar to those of Solactive DeFi and Blockchain inventory emerging from the German indices provider. Goldman Sachs also reported in its filing that a whopping 80% of the fund will be dedicated to investments in stocks, securities and fintech companies included in the inventory.


Goldman Sachs’ DeFi ETF is Contradictory

Despite claims by the investment firm, the firms featured in the Solactive inventory are not by any means DeFi firms or engaging in decentralized finance activities. The inventory mostly comprises big players in the US technology industry and a host of global telecommunications firms. The top three businesses on the inventory include Nokia, Facebook and Alphabet by Google. None of the top 20 firms is in the DeFi or blockchain sector.


Other firms who have their stocks on the inventory are PayPal, Visa, MasterCard and as well as tech conglomerates such as Intel, Microsoft and IBM. Tencent, Baidu and Alibaba are featured as well. A cursory glance at these firms shows that there is nothing like DeFi. So it leaves much to be desired why Goldman Sachs termed its US SEC filing a DeFi exchange-traded fund (ETF).


Interestingly, this is not the first instance in which the Investment firm has gotten things mixed up. In a report back in June, Goldman Sachs claimed that flagship cryptocurrency Bitcoin was not ideal for long-term investments nor was it an investable asset class. Prior to the early June report, the investment firm touted Bitcoin as an investable asset in a different report.


Goldman Sachs Speculates on Ethereum 

Backing up its June report, Goldman Sachs argued that an “Ethereum Flippening’ would likely happen such that Ethereum will displace Bitcoin to become the foremost cryptocurrency in the industry by market capitalization. Essentially, Ethereum will become a better store of value than the flagship cryptocurrency. Goldman Sachs also stated that 45% of the world’s wealthiest people have interest in cryptocurrency. 


In March, the US SEC received an application among 12 others for a Bitcoin ETF from the investment firm. While Goldman Sachs may be getting it all wrong on what DeFi means, it is likely that the fund will feature investments in DeFi tokens just like Grayscale. Besides, experts have already suggested a collaboration between decentralized finance and traditional finance such that banking institutions will integrate the blockchain and DeFi protocols into their services.


Grayscale became the first Traditional investment firm to launch a DeFi Fund. Earlier this month, DeFi protocol, Aave Finance launched a DeFi Fund for institutional investors.



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